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tv   Squawk on the Street  CNBC  September 6, 2012 9:00am-12:00pm EDT

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unprecedented in its size and that's troublesome. i hope here remaining in the 60 days of the election we talk about job creation and getting our economy back on its feet, and that's a subject discussed in some detail, i hope. >> all right. great. larry, thank you. >> make sure to join us tomorrow. "squawk on the street" begins right now. good thursday morning. welcome to "squawk on the street." i'm carl quintanilla with melissa lee, jim cramer and david faber live at the new york stock exchange. what a morning. already, barely 9:00 on the east coast, we've got mario draghi speaking even as we speak. a slew of data regarding the jobs market in this country. take a look at futures. slightly off the highs, still trying to get some clarity on what exactly draghi is spelling out here, but a good start. we'll see if that's true. meantime, arrows in europe at this hour, mostly positive for most of the morning and still are. ftse is up about 30 point.
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our road map says enter the draghi, mario draghi who says the bank plans outright monetary transactions. still trying to put some meat on that bone. says that uncertainty is heightened as the central bank also cuts its forecast for 2012. how does this affect your portfolio? >> meanwhile, jobs data in this country, adp says private perils up the most since march and challenger says layoffs at a 20-month low. what does it mean for tomorrow's big jobs number? >> four hours from now in santa monica, california, amazon announced what's expected to be a new kindle, although the rumors range from a smartphone to a video box. can the giant do better than nokia's release yesterday which is already prodding analysts to slap on the sell rating. but first, in an effort to solve the european debt crisis, ecb president mario draghi outlining the central bank's buy-in program at a news conference going on right now in frankfurt. draghi says the ecb plans to launch outright monetary
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transactions with the purchases to be focussed on bonds with maturities between one and three years. draghi adds the transactions will be sterilized and no limits will be set on the size of the bond buys. these comments coming after the ecb kept their benchmark interest rate unchanged at 0.75%. a lot telegraphed yesterday, but is some there there today? >> we needed a september surprise, because you're absolutely right. everything was telegraphed. what would have been great is something that wasn't telegraphed. spoke about this earlier with david which is they cut rates. cut rates from 0.75 to .50, it would show him on the team with bernanke. i think bernanke's plan is working and like the preliminary jobs numbers we saw. >> looking at europe and the big picture, we isolate events. this is an important one, no doubt about it. seems to be having a positive effect. the ability of the ecb to come in and buy bonds at certain points without a so-called bailout being in place, but let's not forget the overarching
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theme that we've been emphasizing for years at this point which is they have too much debt. spain's economy still going the wrong way. italy's economy is not going the right way, and overall europe is not going the right way in any way, shape or form. ? >> except for the stock market. >> except for the stock market. >> that leads me to the next question, from the trading perspective one scratches their collective heads wondering why are futures still higher in the european markets i sort of get. they weren't necessarily able to fully react maybe to yesterday's leaked report, but in terms of today's action, wouldn't it be sell on the news? wouldn't you think there would be a sell on the news reaction? >> well, i think that we just had a big bad event. something we were worried about which was would draghi deliver. he delivers, and now we're focused on tomorrow's number. i literally really think the close of today is going to be more important than the opening because it looks like people, saying, okay, got what we wanted over there, what are we getting over here and maybe the numbers, we saw challenger, adp, weekly
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jobless claims. buttress-wise an amazing rally in retail stocks. focus comes back here and people are trying to jump the gun of tomorrow's numbers. >> onite them europe not being talked about a lot is a meeting with merkel and lahoy. so much will center around spain, whether or not they ask for something wlout knowing the full terms of a bailout. >> i monitor spain through bancos san tandero. they are the real estate play because it's trades here, san, and it's going up. do bbva, not as substantive, but those stocks have definitively bottomed. he used the malcolm "x" by any means necessary. banco santander terms. >> they did not know what's going on in spain.
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they announced an enormous ipo in mexico this week which is a positive which shows how much the resources that they can conself-bly have at that bank. >> right. >> i don't know if it's a got reflection of the spanish -- >> it's lehman. it has to be saved. the final days offy will 00 was hideous. remember lehman was trying to sell something to korea. people at banco santander, do not take me wrong, i don't want to alie you with a bank that many feel was completely reckless, but if you bail out and save santander and bbva, you buy it with wells fargo which is 30% of the mortgage market in this country. we need a strong spanish bank to get us through this period because we need growth. there's no growth over there. that's what you keep talking about. that's the code, growth >> i still don't see necessarily a recipe for growth. i think the plan --
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>> you see more of a doubter party sort of thing. >> the plan is we'll stumble along for four years and finally something will go along the right way and the credit markets will behave and we won't have to worry as much, and that's the best case scenario. >> does allow us to focus on the united states. >> exactly. >> we're probably doing better than any economy in the world. >> you're not trying to whistle past graveyards on that front, right? you're not trying to ignore europe. >> melissa mentioned the trading perspective. i think that the traders are saying, okay, now, what do we have here, and when we look at here, well, why don't we see with the steel industry, the auto industry. we focus -- the fill lebeau interview was incredibly important where allan mull ha ly says europe, we don't have it. the truth is united states has it. 14.5 million vehicles. that is a bull market in cars. >> right. >> we are talking about this
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upgrade today. sun trust, why is sun trust upgraded? i think that's very significant, not just because my trust owns it, but i'm looking at sun trust saying that is, again, the housing market in the south because the federal reserve didn't like sun trust. housing, autos, retail. what else do we need? >> right. >> well, we could use china to start growing a little bit faster instead of going the other way the, could use europe to at least flatten out. i just wonder about the loop there that we're a part of, and we seem to be the only one still trying to clutch. >> what happens if we're the locomotive? is that too insane to think we -- we used to be. >> oh, yeah. >> remember when we were the loc motorive. >> still far and await world's largest economy, don't get me wrong. >> it's not spain. >> it's not spain. >> but, you know, what's interesting you is use the word trade, and we use that a lot here, of course. >> yes. >> but what i hear from a lot of people is that's kind of the mentality you have to have in this market, even if you want to be a long-term investor because
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everything so much does become a trade in a world which we're describing right now. >> i was thinking about mark haines this morning, legendary, fabulous, late, you're in his seat, and mark always talked about me the church of what's happening now, reverend jim bob, always doing it -- the way that mark did it, ironic, sardonic way. everyone is in the church of what's happening now. this has become a major conversion. it's almost like, you know, like a crusade. >> hard not to be still with so much out there. that's why you don't see any m & a of any size. >> we saw a huge deal today! david, we saw a houle real estate investment trust deal, a $2 billion deal. >> was it that high? >> looking like it right now. >> speaking of the church of what's happening right now, jobs happening tomorrow. that's what we're focusing on today. lots of news setting the stage for the key august employ. 201,000 private sector jobs added, weekly job claims falling by 12,000 to 365 and in august
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data from outplacement firm challenger, grey and christmas employers announced the fewest number of monthly job cuts since december 2010. certainly fine and good, positive data points but how much do we care at the end of the day of adp and its predictive power for jobs tomorrow? >> it's been spotty. >> challenger, i think you can create a mosaic that relates to why back-to-school sales have been so strong, because it looks like there's not been a further drop-off. i know that the tendency here is to inject politics because of what's going on every night, aside from what i watch, of course, which was the cowboys devastating victory over the giants. >> unfortunately. >> it's a long. >> oh, yeah, sure. >> what does matter is that the united states is not seemingly out of sync -- the numbers are not out of sync that makes it so bernanke can continue to give us a backstop. this bernanke put, it's okay. you know, these are -- these are okay things.
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you know, you look at me so skeptically. is it just because of this tommy hillfiger tie that i'm wearing because i have pvh on today. >> you went with the penguins. >> getting used to that. >> but i'm just saying that i know that your skepticism is right because longer term we're not seeing jobless claims coming in, saying we're creating millions of jobs. >> and there's the notion of the pain tree, hedge funds, money managers, underperforming in the s&p 500 and they have pressure on them from investors who are looking at the s&p 500's returns saying why doesn't my statement reflect the gains that we've seen in the s&p 500 so far this year, so this pain trade that's going on, and that could be the floor under all of it. >> tom lee over at jpmorgan, a strategist there, has always done work on that, just how much everybody is underperforming and how much they will have to try to make up, but it's a good point. >> you can do what eddie lampert
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did this morning go into and buy sears and improve your market that way. >> the stock is up, by the way. >> don't spend $100 million to mark up your stock. you invest it because you think the ceo is turning sears around, not a horrible comp stores number. >> do you buy that and say i'm not going to sell for a year? >> some people told me yesterday, asking why is tech so strong? well, facebook. facebook, and i said, well, yeah, well, maybe facebook does color trading. apple wasn't doing well. facebook was up yesterday, all right. look, i'm grasping here. would you let me play the grasp straws game for the first five minutes of the show. facebook was up yesterday. >> yes, it was, and up nicely. had a great day, historic. >> adp, by the way, highest since march. challenger layoffs, 20-month low, even claims today a little bit better, down 12,000 and adp
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revised higher for july, not by a lot, but not a negative revision. >> melissa is right in terms of the forecasting power versus tomorrow, and are we borrowing tomorrow's potential rally if we get a good number? >> yeah. >> i think that this market is this hour analyzing that data and liking it. now, at the end of the day, we're going to get people who say, well, wait a second, if it's a good number, all that does is live up to the three numbers we got this morning, and maybe they want to lock in profits. this insanity of literally the 9:30 market being different from the closing bell is something that we've all kind of had to adjust to. >> yeah. >> one big parlor game tonight at the democratic convention. the president is expected to have been briefed on the number by the time he speaks, around 10:30 or so eastern time. so the game will be trying to judge clues as to his body language, if tomorrow's number is good or bad. it will be fun to watch. >> funny you mention that because it's very rare that you
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watch a speech by a guy who is running for president and you glean what you think the number is going to be. after hours, people, will they be trading in europe over what the president says? it's always possible. >> yeah, i find it hard to imagine. you never know. he's going to be positive, no matter what. >> if he's muted you want to sell the market at 10:30 p.m. at night. >> if he's glum i would sell. >> tomorrow's august jobs number provides an opportunity for you to nail that number. tweet us your predictions for the august non-farm payroll at cnbc. back-to-school bag signed by the "squawk on the street" gang. one minute before the release tomorrow at 8:30 tomorrow morning to get your guesses in. >> 138 was private and 127 overall. >> that bag is worth -- >> oh, yeah. it's sweet.
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>> on ebay. >> you should throw in two or three secret stock tips that you don't talk about on air. >> i will. my secret stock tips are sprint and -- >> that's no fun. >> all right. is one stock we're watching, trading higher in the pre-market, looking to up the ante in the tablet wars. hours from now, the online retailer widely expected to announce its new version of its 7-inch kindle fire which could be priced as low as $100, according to some analysts. also speculation am sob could launch an updated kindle e-reader as well as a larger tablet. now, just a week ago, amazon announced its kindle fire had sold out and captured 22% of u.s. tablet sales which led people to believe they stopped production in order to gear up for the next version. we've also confirmed that jeff basos will make the announcement himself and could it be a departure from the tablet, a phone that has been rumored for
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so long or a combination device is this. >> i like the fact that there can still be a surprise factor here. this stock has been an incredible performer considering the last quarter was a disappointment. a lot of people feel this is a total hope stock. it remains among the people i talked to in the hedge fudge community, that's certainly not panned out. >> a painful short to be in. >> house of pain. >> just on multiple. >> incredibly high multiple. >> why bother. >> you just can't do it. >> did you see the ad for it last night in the games? >> it looked great. maybe that was an older version, but to see an amazon ad saying, look, we've got this. i looked at it at first and i thought it was an apple ad, a guy that seems like the apple format. amazon's really going out there very publicly on this, and we know that there's so much momentum in amazon. >> and bazos fashions himself in the sense he does the presentation, they have a
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jobsian feel to them. >> we've confirmed that he will man the helm in santa monica. >> he can drive the stock. got to love the guy. >> in terms of nokia, deutsche bank takes it to a tell today because they say the lumia is not a game-changer. i don't fault you if you don't want to buy this stock in single digits. >> if you ask me what stock on "mad money" people ask me most about, what's the most asked-about stock, can i buy nokia because it used to be higher. i saw several arguments with research in motion. you know, look, the phone's not good enough. i mean, this is like you can put dog food out there and say new and improved, and sometimes the dogs just won't eat it. >> i mean, wireless charger. the core of it, the core processor, it's only -- how does that work? dual core processor but we're in a world of quad core processors so what does this bring to the
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table? i don't know, behind in the technology. >> got to be a third entrance, samsung and apple. there's a duopoloy and no offense to sprint, a duopoly in the providers between sprint and at&t, with hopes that a nokia, motorola or r.i.m. will be a competitive. >> nokia was a good for absolutely nothing. >> say it again. >> dog food, citing '70s -- >> is it so bad to put it in the language that we all know, right in the language that we all know. >> we should mention motorola had an announcement yesterday, rozrs, 4g. >> ice cream sandwich. >> they know the chip so well and they really are fast connect the into the 4glt. >> and google going up. the google story i think is terrific and as i said yesterday on the fabulous "street signs"
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show, don't worry about china slowing. >> is that part of the fabulous "street signs" show? >> i like to say it's on cnbc so it's fabulous. >> i know. >> google, do that again, great joke, but google has no chinese slowdown. >> because there is no chinese -- >> but i'm trying hard here. this is -- i feel like don rickles, and it's just not working >> i love don rickles. >> you've got the hair. >> i do -- don rickles was great in "casino." >> he's like 97. >> when we come back, a revenue miss at verifone. look at that stock down 11%. also take another look at futures. things holding up here as people begin to try to guess about-term's jobs number. "squawk on the street" back in a moment. trading tools for all. like our all-in-one trade ticket. we put strategies, chains and positions all on one screen. start trading today with optionsxpress by charles schwa
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i'm i'm on hobbs, the ecb conference is coming to a close in which the president mario draghi has been outlining the purchase of bonds in the secondary market. a new program of omts, as it's being called. what's interesting is there is conditionality attach. people or countries will have to ask for a formal bailout, but maybe not a full bailout. they are creating a new category of precautionary action, so the ecb could intervene in a precautionary way without a full application for an eu/imf bail out and that's probably the new piece of information, carl.
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what's also interesting is we are not selling off in europe. you know, most of what draghi is saying today has been trailed in the press and yet the markets are holding relatively firm. there is no disappointment yet. back to you. >> a good point, no disappointment, no selling on the news. we'll see if it lasts, granted. europe is hanging in there, too. >> look, there was nothing -- a few months ago you would have said i can't believe they will do this, the fact they sterilized the bonds. not like they are printing money so gold is not soaring like i would have liked. not getting hit. hey. neutral isn't so bad versus what we thought could be happening say in the month of june where the germans were simply saying, listen, you know, pox on everybody's house. >> i suppose. corresponding with one of the hedge fund managers whose opinion on this i've always enjoyed, let me just share quickly. the positive is they bought more time to force a nice long
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depression before the threat of collapse. >> the longer you play it out, i'm a believer the more time you have to prepare for some collapse, and the longer you play it out, the more our economy can gain steam, if you believe that the fiscal cliff -- >> they need to value. >> and grow. >> coming up next, kraim cramer's mad dash ahead of the opening bell. let's take a look at futures one most. 82 points on the dow, it looks like we'll add. much more "squawk on the street" straight ahead. at bank of america, we're continuing to lend and invest in communities across the country. whether it's supporting a delaware nonprofit that's providing training and employment opportunities, investing in the revitalization of a neighborhood in the bronx, or providing the financing to help a beloved san diego bakery expand, what's important to communities across the country is important to us. and we're proud to work with all of those who are creating a stronger future everyone.
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yeah, a few things we're wondering what they are good for, whether it's nokia, victor cruz's hands or -- >> that's way too harsh. to put nokia in the same sentence -- that's just an insult to cruz. it's one game. come on. >> three drops though. three drops. >> let's talk some pcs today, a couple of big calls and not good ones. >> look, intel, merrill numbers, seagate, i'm talking about the death of the pc here. now someone is going so say, well, it's exaggerated, but we're seeing the ipad, the kindle, the cell phone all cut into desk top, and these are no-growth stocks and you own intel for the yield. microsoft trying to get beyond just the pc. obviously they have got more things going, but, you know, carl, if you -- ocz, a little company, really got crushed today. you know, again, we can relate that to these devices that are not the cell phone. >> yeah. why hasn't it hurt seagate this
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year? >> seagate's been the greatest short squeeze. it's been amazing. no way anyone thought this company would do well. raised it with dividends. we're not talking about the ibm selectric. >> let's get to the opening bell in a couple of moments. don't go away. bob...
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oh, hey alex. just picking up some, brochures, posters copies of my acceptance speech. great! it's always good to have a backup plan, in case i get hit by a meteor. wow, your hair looks great. didn't realize they did photoshop here. hey, good call on those mugs. can't let 'em see what you're drinking. you know, i'm glad we're both running a nice, clean race. no need to get nasty. here's your "honk if you had an affair with taylor" yard sign. looks good. [ male announcer ] fedex office. now save 50% on banners. on december 21st polar shifts will reverse the earth's gravitational pull and hurtle us all into space. which would render retirement planning unnecessary. but say the sun rises on december 22nd, and you still need to retire. td ameritrade's investment consultants can help you build a plan that fits your life.
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we'll even throw in up to $600 when you open a new account or roll over an old 401(k). so who's in control now, mayans? just ahead of the opening bell here on thursday, september 6th. the german-american committee of greater new york celebrating the 55th annual german-american steuben parade over at the nasdaq. key logic supporter of networking infrastructure solutions. made our way through draghi, adp, through claims, challenger. all of the data, mostly good. still got to get through ism non-manufacturing, guys, about half an hour from now. >> i'm watching fedex.
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fedex is a terrific play on worldwide growth, and we know how bad fedex is doing as of yesterday. here's the stock almost back to where it was. i think that says hope. >> is that fedex only? seems as though fedex does not typically respond that poorly when it misses. >> never seems to go down a lot. >> i'm just saying -- i'm using that as a microcosm of what the hedge funds are used to go catch up. caterpillar up again. caterpillar was up yesterday. people want to get on something that can roll, and i think caterpillar is more likely to pre-announce negatively than -- because of china, right? so you -- you're buying a chinese playing caterpillar in order to play draghi. that's a non-starter to me, but that's what people are doing. >> we're watching the chip trading. mentioned the death of the pc, so many analysts, and today looks like a catchup play on the trips. philadelphia semiconductor index higher by 1.7% and intel trading
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higher and amd regaining some of the ground it lost yesterday, up 2%, so the death of the pc, it may be, but in the church of what's happening right now. >> well, remember, there's plenty of chips that go into these other devices. skyworks solution, very positive note out today, an apple iphone play. >> qualcomm. >> qualcomm is doing well. i think that -- that the numbers aren't going to be there, but intel has a great balance sheet, and this has been -- intel has said over and over again this is not a great quarter for us. this is like so many ways to be able to make money. cypress, i do want to point out, missed the quarter, missed the quarter but just did announce that they shipped the billionth touch unit, major touch screen away from a. texas instruments is more of an apple play. >> going to be interesting with so much discussion and supply shortages when it comes to sharp and some of the screens regarding the iphone 5, we'll see if that hinders, though some of the projections for the first
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week 6 million to 10 million units in the week alone. >> 4 or 5 million units. >> people will ask will you get rid of your iphone 4s for the iphone 5? after reading the jobs book by walter isaacson, really a remarkable book. >> you're moving awfully fast. >> going where ron johnson saved the retail and j.c. penney keeps going up. doesn't mean the fundamentals are better, but i do think that steve jobs with iphone 5. >> you think that was in the works before he passed away? >> i think it was on the white board. >> seems to make sense. >> the biggest gainer right now, shld. >> up over 7%. eddie lampert stepping up and buying 2 million shares. esl, he controls that company. >> right. >> a lot of transactions. >> when you were buying last, wh what, did you see people in the stores? >> i've never gone to saers.
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>> have you ever gone to sears? >> i've been to a sears a number of times. in upstate new york. only person in there. >> you shopped there. >> i was looking for a tie or something. >> tires. >> the costco cfo got in touch me because i said on "mad money" costco didn't have as cheap of tires as sears, they wanted to know where it was and promised to beat sears price. >> they called me on my cell phone. >> that's service. >> watching shares of disney, by the way, yesterday's session hitting an all-time high in disney. we're pennies away, 51.17, the intraday high 15.21. a lot of news around this stock, well-loved. if you think the u.s. economy is okay, jim, this is one you want to be in. >> that chart is ridiculous. >> a breakout. >> talking about $92 billion market value now for disney, as you said, an all-time high.
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wow, the entire media complex has had a pretty good week and is up rather nicely right now. 1%, 2% gains for the likes of news corp, time warner. >> cable doing quite well, the baby store. the glendale store, the disney baby store, much more going to be a product line than that store. the store is an aberration. >> parks are doing well. >> the expansion of the california park, monumentally good. this company is still inexpensive versus a lot of classic growth stocks. i -- bob auger is doing a great job. >> not to mention the cruise ships, people love the cruise ships and have another one out there. >> people loving cruise ships. >> family vacation, cruising around europe. >> yeah, it was very crowded, very crowded, in the tourist areas, that is, a great time. >> and espn, looking at some of the other cable stocks, espn is on fire, okay. just a remarkable brand, and i have to tell you that this -- you don't -- this is the sum of
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the parts that's better than the part. >> no doubt. >> but, boy, every time you come in contact with one of their divisions, it's doing great, including "the avengers" thing. >> sometimes we forget that cornerstone is 20% of espn, we forget that. >> goldman sachs yesterday posted very strong gains in the session on very heavy volume. this is an extension of the trade on goldman that has gone on for the past week or so, ever since the upgrade from csla so goldman is up nicely here today, 1.2%, the gain. >> i'll mention one more. men's warehouse raises their view for the year, be a 11% gain today. >> look, i'd been recommending men's warehouse on "mad money" and got slapped down to earth when they didn't deliver the number. a consistent number, big buyback. men'swear, david faber's special called out today on cnbc about
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men men's wear on cnbc about his much-noticed comment. the special was much noticed we he will. >> we elicited that comment. >> very interesting on the comment about the men's only store, a store in part started by j. crew, hurearst does own 2 of espn. >> let's go to bob pisani. >> dow is up 144 points, but we were up before the draghi press conference. we've been steady really since the draghi press conference in terms of the future, and those who didn't get the details. well, not far from what we were talking about yesterday. no limits on the size of the bond-buying program. fully sterilized. purchases will be terminated if there is non-compliance with the terms, and that includes the conditionality. there will be bond purchases of maturities one to three years
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and purchases of the country bonds will be published monthly. a new piece of information, a very valuable one, but now we'll be able to keep score in a much better way than we did under the greek program. conditions of the bond-buying program. adherence to the commitments and the esm has to be fully fulfilled. we don't have it. nobody has actually applied for anything so there's no commitments to be fulfilled and the esm is not functioning yet so this is sort of a program that's sitting on the shelf right now. there's another new piece of information we did just get. draghi said there would be no bond buying of portuguese or irish bonds. that's an important piece of information because a lot of people said, all right, spain and ireland -- spain and italy have it applied, but there are agreements and bailout agreements with portugal and ireland. maybe they will apply first. that's apparently not going to happen, mr. draghi says, or at least not happening this year. now, i've got to ask a couple of questions, two questions on the floor that everybody has been asking this morning. number one, why didn't mr. draghi actually cut interest
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rates, and he didn't say, and i think the answer is, number one, he raised the inflation forecast to 2.5% and now at the high end of the comfort range that they have had at 2%, but the other point going on here is i don't think it's going to help them. i don't think cutting interest rates a quarter point is going to help spain. i think everybody knows that. i think that the ecb is now very deep into what one trader down here called non-standard territory. in other words, they will rely pretty muff on the bond-buying program to do all the heavy lifting. they are not expecting interest rates -- interest rate cuts at this point to make any more difference in changing the economic policy. the other question is why didn't the stock market move at all on the draghi presser? it had been up going into it, but the reaction was pretty small. a lot of different theories about what's going on here, but the main thing is draghi was pretty downbeat on his assessment of the eurozone. if you look carefully, he notefully lowered the gdp forecast. 2012 was down 0.6, down 0.2, so basically we're in a recession
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in 2012, but also he lowered the numbers from 2013, down 0.4% to on the high end up 1.4%. he lowered that a little bit more, so the assessment is a little bit more downbeat at this point. i think that's probably the important fact of why the market didn't move that much, but still, we're on the upside right now of 155 points in the dow. guys, back to you. >> thanks, bob. let's head to rick santelli at the cme group in chicago. >> thanks, jim. a lot of people on this floor were not at all surprised they didn't lower rates, because if you listen to mario draghi his hook to get in to do these huge programs was that there was a broken monetary policy transmission issue. by raising or lowering rates at this point, he would add mitt the hook to get them in was untrue, so this forum never expected a rate move. let's look at the marketplace. we'll get a 24-hour, did they get upward yield, and not being
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affected by draghi was the adp number. a lot of volatility and responded to our data and draghi and, indeed, it's still holding up yields higher, well into the 150s. it wasn't that long ago we were 20 basis points lower. it's been a fairly big move. euro currency. the 24-hour chart shows a lot of currency, not on its levels, but open it up to the comp which is early july and still at rather lofty levels so it's not been tested by the traders at this point. many say the traders aren't going to test mario draghi. they are going to sit and watch and watch the economy which they think is just as important, and the last chart, this is the spanish 10s minus 2, why on the trigger that mario draghi brought out the cannon and he affected the trade. it steepened an extra 200 basis points, so the microphone still is working, and we have to pay attention to this spread, in particular. jim, back to you. >> thanks a lot, rick. gold hitting new six-month high.
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by the way, gold up almost 10% for the year. let's go to sharon epperson at the nymex. >> trying to gauge draghi's comments and ascertain what the growth prospects are like for the eurozone, and that is what muting some of the gains we've seen earlier, particularly in the gold market, where gold prices came close to 1,717 an ounce, above the 1,700 level in gold, a new territory there, and we are seeing, of course, this activity, largely due to the fact that there is going to be more stimulus, and that, of course, is what is driving the rally that we're seeing, not only in gold and not only in gold, in dollar terms, but gold in euros as well, setting an all-time high level. the real spike though that we've seen in the commodities market in the last few minutes has been in the crude oil market where we've seen the nymex crude price play catchup and seen a nice bounce here. brent also higher and we'll get, of course, inventory data coming out later this morning on oil inventories and, of course, we'll get natural gas invin
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industries coming out as well. david, back to you. >> thanks very much, sharon epperson. wanted to direct our viewers' attention to shares of aig had been down as much as 2% this morning, though off of those lows. in fact down about 3/4 of 1%. a bit of a disappointment this morning though it needs to be put into perspective over the last near as well as the last four. aig saying it will sell or is in the process of selling $2 billion worth of its stock in its aia group or what was its own aia group. it now will own about 13% of that company after the sale, but there had been some hopes that perhaps aig would embark on a sale of its entire stake worth some $7.6 billion in aia. the market had kind of been reading that that might be the case, and perhaps they wanted to wait out the market a bit on this, so a $2 billion sale. proceeds of which will help go towards as much as what they will be saying will be a $5 billion buyback of shares from the u.s. government.
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now, again, if it had been 7.6 billion that they sold of aia, you might have gotten as much as a $0 about buyback which would have allowed the u.s. government to come with a 20 bile iion. we don't know what aig is going to do. it does appear that this will be a phased sale. big picture being four years after the bailout of aig, if you told me there was any chance that this company would survive, would i have said no way. we are now looking at the government being -- having a path clearly to sell its remaining stake. it's a large one, 53% still at this point, but it's clear that a lot of it will get bought back by aig and there is demand for this company, tangible book which is around $63. >> remarkable job, a great man
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theory, the ceo who really did drive this. i was disappointed and felt there could be as much as 9 billion sold and then figured you could get the u.s. government down to a fraction that wouldn't even make it a factor, the overhang would go. >> a big idea of a huge cleanup trade and maybe even bring in a high-profile investor, who knows, you know. >> because there are people who understand the insurance business very well. >> there are. >> the insurance business is a huge money-maker at this point in the cycle but more importantly, david, you are so right. these guys were left for dead. unlike a lot of the book values out there that seemed low or unrealistic for stock prices, he's bringing out value of the book face and it may actually be more relevant. >> may very well be, rate? >> plus people are talking $3.50 earnings for 2013 so a stock trading ten times. from there, he's really effected an incredible turnaround at aig. again, a little bit of disappointment today, but the big picture unchanged. >> my charitable trust remains a huge buyer of this thing because
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benmoshe is so incredible. really remarkable, doesn't trash the old guys but he said this thing is impossible to understand and i'm making it possible and that's helping buyers come in and buy. >> question of better off certainly will be asked a lot tonight. four years later aig is definitely better off. >> coming up next, a rough start here for verifone. the electronic payments company down about 10%, this on top of a 20% decline in the past six months this, on weaker than expected revenue guidance. we'll talk live with the ceo to get the story there, and as we head to break let's take a look at this morning's early movers here on wall street. >> want to send your kids off to school in style?
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how about this cnbc "squawk on the street" book bag. >> it's amaze sglug know you want it and can be yours if you can guess this friday's non-farm jobs number. tweet us your guy @cnbcsquawkst and don't forget the #nailnumber and you have to be 18 years of age, too. sorry, kid. for all the official rules and details go to you have until 8:30 a.m. friday morning. good luck. we're sitting on a bunch of shale gas.
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that i forget how to put gas in my car. ♪ on a day that the dow is up 1%, all 30 components in the green. not much heat here except to the upside. take a look at the contributors to the gains. ibm is certainly up there. up by about $2 or 1% on the sglegs all right. meantime, tonight the president will make his case for re-election. "wall street journal" makes the case that when he takes the stage at the dnc he'll probably already know the details of the jobs numbers which comes out tomorrow. that brings us to this morning's squawk on the tweet. what might the president's indicator tonight be on the jobs
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number? tweet us @cnbcsquawkst. get your responses later on this morning. could be anything. could be how long of a gate he takes to the podium, hair length, you name, it jim. >> there's a lot -- a lot of ways to signal. a lot of ways to signal. people will be in on the inner circle. i'm not one of them. i won't know. >> he won't say i know the jobs number is going to be great. >> that would be something, wouldn't it? >> duke and duke would know the number, right? >> mr., what was it, bks. >> don't you people heard of coasters? >> dow up 150 points. a lot more "squawk on the street" still ahead. coming up, we're all artists in some capacity, some bigger than others. cramer's talent lies in the market, and he'll show it off with six stocks in 60 seconds when "squawk on the street" returns.
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simon hobbs has already helped us decipher draghi's press conference and is back with more. >> not disappointed the markets. got a major rally under way. our all-star panel will piece through exactly what he's saying and what he's not saying and whether the markets could fall or rally further from here. verifone's chairman and ceo will be on the show. that stock really shifting today, and illinois governor pat quinn will also join us from the democratic national convention. an action-packed hour on a big day for the markets. carl, back to you. >> thanks so much, simon. let's get six in 60, six stocks with krimm cramer in 60 seconds beginning with the stock you just mentioned, suntrust. >> worst to first. many didn't like the initial plan they submitted. now they will be blessed this. bank is worth a lot more. >> goes from hold to buy at jpmorgan. celgene. >> a new word on a new drug that they have that is for arthritis. it continues to deliver and looks like they have big
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products to develop. >> walgreens same-store sales, not good. >> the fight with scripps, killing them. >> euronext. >> this is the one that's most reflective of that. still inexpensive. >> stanley works, the ceo on. >> this is a great story. they say it's a great way to play housing construction, i agree >> and pvh. >> manny tirico. very rare do i wear a tie that's thin because my body doesn't do it. this is a c.k., calvin klein shirt in honor of the two brands that are pvh. it's been a remarkable performer, best stock in the book. >> for more on those stocks, jim, s&p's right around 1419 here. the area where it's been wise to sell. >> right. >> and buy it back at 1395.
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if we bust through, then what? >> look, i think that we're going to start talking about the idea, united states getting better. going to start talking about the fact that how the iron ore stocks may be bottoming which is saying you should buy china. it's a really hard short, this market. you can thread the needle and put it out tomorrow and bet you can buy it back at 940. a difficult short. don't want to call it a great long, a really difficult short. >> thanks a lot, jim. >> see you tonight. >> still a lot to come. as simon told you, we're back after a break. don't go away. copies of my acceptance speech. great! it's always good to have a backup plan, in case i get hit by a meteor. wow, your hair looks great. didn't realize they did photoshop here. hey, good call on those mugs. can't let 'em see what you're drinking. you know, i'm glad we're both running a nice, clean race. no need to get nasty. here's your "honk if you had an affair with taylor" yard sign. looks good. [ male announcer ] fedex office. now save 50% on banners.
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welcome back to "squawk on the street." rick santelli here. august ism, non-manufacturing, 53.7. that is higher than the estimates. we were looking for around 52.5. last month's stands at 52.6 and 53.7 equals what we were looking at in may, so definitely all the data today dropping claims, better than expected adp, and mario draghi's words still standing tall like actions. keep market moves intact. carl quintanilla back to you. >> well said, rick. thank you very much. >> we are batting 4 for 4, but the big number, of course, is tomorrow. let's get to the road map for
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the next hour. you down with mot, ecb president mario draghi is making the case for monetary outright transactions and unlimited new bond-buying programs saying while the euro remains irreversible so where's the sell the news reaction as markets seeing gains of over 1%. >> and from draghi to the tech world, amazon gearing up for its much-hyped announcement later today. many expecting a new kindle on the horizon, but will the device be a true claim-changer in a highly competitive space? >> and verifone sees its numbers tumble and we'll sit down with the ceo for his take on the numbers for the quarter. >> the ecb is ready to buy limited quantities of short-dated spanish and italian bonds in the secondary market, if either madrid or rome request a full imf-style reform program, or and this is potentially the new piece of information, it also might buy, it says, as
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precautionary action. >> the present problem is -- the present program is very, very different than any other we've had in the past. first of all, we have a conditionality element. that's -- that's the -- i would say that's the most important difference. that's the most important difference because it -- it really puts together our intervention with an ownership of the economic program that a certain country has, and also by the other governments that have to vote in favor of an efsf intervention. >> let's bring in an all-star panel. kelly evans in london, michelle caruso-cabrera at headquarters here in the united states and sylvia vodva joins from us frankfurt, in the ecb meeting and barry knapp, head of the u.s. equity portfolio strategy
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at barclay. sylvia, you were there and asking questions of the man. let me kick off with you. is it your view that they are opening up a new chink of light, that they could buy italian and spanish debt as a precautionary measure without a full imf-style bailout, without doing the mull monty, if you like? >> well, there is very much this sort of devil in the detail. when they say as a precautionary measure, they don't just mean we can buy it ahead of any efsf or any efsm program. either it has to be a full bailout, as you say, the full monty or we have some kind of memorandum of standing that a style program or precautionary program is needed so there has to be an application in question, whether it's italy or whether it's spain or any other country as one. secondly, there has to be the second leg that draghi was talking about, primary market buying by the efsf and the esm
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and then the ecb will step in, maybe with secondary market buying. at the moment a lot of promises -- >> simon -- >> michelle. >> at precise moment you were doing your live shot, draghi was asked a very specific question about the eccl, their acronym for it, is it a bailout light? and he said no, no, no, there will be conditionality on the eecl so both involve conditionality. i don't really understand the difference except maybe on a full bailout you actually ask for money and on the eecl you just ask them with help on your interest rates. >> kelly evans in london, the big question here, and a news conference between the spanish prime minister and angela merkel as well this morning, the big question is will madrid ask for a bailia, will it trying they are process and what the delay might be, because they have a lot of money that they have to raise to pay back bonds on that
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next month. where are you? >> as both michelle and sylvia just pointed out, these mechanisms include the strict conditionality and say by name that the imf will potentially have to be involved. a couple of other changes here that might be relevant on that front. one, mario draghi talked about how they are going to be more transparent this time around, and yes, while markets had a good sense of who was involved the last time, maybe this is just a formality but it does mean it will be right up there in black-and-white print are, for everybody asking what funds and what they are getting. second, there's questions whether spain andilitily will be involved in a program like that and with all the uncertainty in the run-up to that, a sequence of steps means they first have to ask for assistance, and it's something that they have been increasingly reluctant to do. >> barry, let me ask you, what does this mean for u.s. investors? mario draghi said what they unveiled today is a fully effective backstop removing the tail risk of europe. is he correct? >> for a time perhaps.
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i would view it thenence of the ltros where the program has its limitations to be sure, some of which your other panelists just somers pointed out, but the ltro did buy some time for them in that case to try to stabilize the banking system. supposedly banks were going to raise equity capital, sort out their liquidity and funding and then the economies would bottom meaning the as set sides of their balance sheet would calculate. i think the banking union is going to prove problematic from a political perspective, giving up your national champions, and from a fiscal adjustment perspective, the ourians seem to view spending cuts and tax hikes as equivalent, and, in fact, they are not, and what you've seen is in places like italy where they have raised the v.a.t. tax, consumption plunged, v.a.t. receipts went down and the country got worse. in spain they just raised the
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v.a.t. tax 3% on a population with 24.5% unemployment, so i think that the fiscal adjustment is going to prove difficult. you probably won't get the stabilization of the economy. banking union could provide difficulties as well, so, yeah, there's a two-month window where the markets over here will probably not worry too much about that, particularly in the run-up to the u.s. elections but i think we get towards the end of the year and could very well be right back in the midst of a severe crisis. >> simon, maybe it's as simple as the actions today help remove catastrophe from the table. that simple? >> that's effectively the question that i'm asking there, and i think we should mention one other thing, michelle. you've done a lot of work on the idea that the ecb would take precedence in its bond-buying, if ever there were a restructuring, and importantly draghi has confirmed he's stepping down from that. >> right. >> the ecb will now be considered alongside the private sector from the work that you've done over the months.
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that's important, isn't it? >> a big change from what we saw in greece, and there were a lot of concerns if the ecb started buying more and more debt of a particular company, a lot of restructuring and the ecb has bought a lot of stuff, i'm below them and am likely to take bigger hits with my bonds. now everybody is even they are incentivized to keep things going. it's a better structure here. >> civsylvia, jump in here. >> draghi was asked specifically that they might be front loading the majority end of the majortuy curve which could throw the whole yield curve off kilter. the other thing we talked about it before, all the strings attached to of the german journalists said isn't there a lot more in this statement that you're trying to make us believe, and i think there is some truth in that because when you look at conditionality,
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conditionality, conditionality, conditionality, they haven't at this stage prompted us that much unless the other part of the equation and these two institutions play a part. the ecb hasn't promised anyth g anything. >> if i could jump in and make one point, too, whether we've solved the symptoms of the problem or the underlying problem, as barry indicated, everything around this move, the market reaction and analysts who are saying mario draghi delivers indicates we could be entering a period like the last round of purchases we we know didn't solve any underlying problems because here we are with perhaps a worse situation but did spur a big momentum move for a couple of quarters and that's the real question now is do you just jump on the bandwagon given that they
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have done enough today or concern yourself with the fact that spain, for example, needs sharply lower interest rates and a completely different set of monetary objectives than some of the other countries in the union. >> right. if i could, a key issue that i would add there, just to underscore that point, when you look at measures of risk in the u.s. market, the level of the vix, the term structure of volatility, the premium you pay for downside puts, those measures are all very low right now, so the market was really not pricing contagion risk. this is far different than was the case last november or october. those measures were high. the ltros forced them lower and that capitulated us higher. we've already had the move higher, and those measures are really low, so to some extent that contagion risk slr priced out of the u.s. markets. >> sylvia -- >> keep your eye on greece. >> as we have the luxury of having you on the show, let me ask you one thing. is germany softening its stance over greece? is greece going to stay in the eurozone? is that a problem that we don't have to concern ourselves, and is there a possibility that when
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the greek prime minister meets mario draghi on tuesday that maybe the ecb will shift on forgiving some of the debt that it has with greece? >> the latter, i don't think so. i don't think there's going to be a move on there. on keeping greece inside the eurozone, i think there is a strong political will to do so much. by the same token, we all know and michelle has been to greece often enough to know that as well, that greece is a special case. greece is a country that has to reconstruct itself and with great exasperation whether it's draghi or whoever, they all come out of there and say we don't see any improvement. we don't see any improvement in moving forward in restructuring this country. that is different from spain, from italy, from portugal, from ireland, so i think there's a great will to keep the uniunion intact, as it will, but someone has a plan saying if we can't, maybe we have to let that one go. it's not one they want with you a possibilities. >> ladies and gentlemen, we have
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to leave it there, i'm sorry. kelly evans, michelle caruso-cabrera, sylvia and barry knapp joining us from barclays, thank you all. >> let's get to jackie d'angelis at the market flash desk. >> we're watching goldman sachs because they have made a call on companies with strong revenue growth saying you have to find these companies, and you have to buy them. in kt if a, they may even deserve a scarcity premium., apple, cabot oil and united technologies. of course, this is a timely call as a lot of companies have been missing their sales growth estimates, and so there's only so many costs you can cut. you really have to look for the revenue growths. melissa, back over to you. >> thank you. coming up, amazon expected to unveil its latest kindle with some reports saying it could be priced as low as 100 bucks, but will the device be a real game-changer and verifone taking a hit on third-quarter revenue miss. a sitdown conversation with the
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ceo about the numbers and his evergrowing competition. want to send your kids off to school in style? how about this hip cnbc back-to-school bag signed by the "squawk on the street" gang, but that's not all. >> it's amazing. >> you know you want it, and it can be yours, if you can guess this friday's non-farm jobs number. tweet us your gues guess @cnbcsquawkst and don't forget the #nailthenumber. oh, yeah, have you to be at least 18 years of age, too. sorry, kid. for all the official rules and details go to you have until 8:29 friday morning. good luck. ♪ ♪ [ male announcer ] introducing a look twice.
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dow up 192 points and with that gain we're seeing all 30 dow components in the green. ibm is higher by 2.5% and microsoft is also higher by 2% so some strong gains, particularly in the tech components of the dow. >> all right. meantime, amazon hosting its kindle event in santa monica in just a few hours. our julia boorstin is looking at what amazon might have in the works and the rumors are running wild. good morning, julia. >> they absolutely are. when jeff bezos takes the stage, all signs point to him unveiling a new line of kindle tablets, as well as perhaps some new content deals.
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shares are trading higher ahead of the expected introduction of a new kindle e-reader as well as new kindle fire tablets to compete with apple's ipad and google's nexus 7. the key question here is how much can the amazon fire deliver while still keeping its price at about half the ipad? after keeping everything under wraps, amazon ran a short commercial for its new gadgets during last negotiate's nfl game, including what looks like a large-screen tablet as well as a backlit kindle reader. expectations have been building for a number of new kindles, including a larger one with a 10-inch touch screen like the ipad. users like the kindle claiming a fifth of the u.s. tablet market since it launched last year. with the event being held not far from the movie studios could hear deals on content vehicles to stream mgm and paramount movies. they have ramped up licensing content from hollywood and
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creating its own, with its own movies from amazon stubdos and more recently its move into tv shows and mobile games. speaking of the rumors, carl, some blogs are reporting that the larger kindle is cold named hollywood, presumably because it's designed for consuming content. there's also been speculation all over the map, everything from the fact that we can see a phone today, to the fact that perhaps amazon is working on some sort of tv, settop box-like device like the much rumored apple tv. no matter what, one thing we can be sure of is based on last night's add amazon will surely invest a lot of money in promoting these new gadgets ahead of the holiday season. carl, jon forth t is going to b inside and i'll be bringing you reports. >> julia boorstin, thanks so much, from los angeles. >> verifone shares are down sharply after reporting weaker than expected third-quarter number. the credit card swipe machine
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citing swings and competition in europe. joining us is doug bergeron, chairman and ceo of verifone. it's a pleasure to speak with you. >> good morning, melissa. >> your stock has had a terribly painful six months, stock down 24%, not even including the 10% decline we're seeing in today's session. i want to go to what a lot of critics say. the bears and shorts will say that perhaps the industry is in a structural decline right now. how can you possibly xaet with competitors like foursquare who are giving away their hardware for free when you're reliant on selling your hardware? >> square is a payment processor. let me tell you where we stand in the industry. we have 20 million of the 45 million lanes in the world running verifone systems. all of these new payments entrance, isis, google, paypal, they want to co-exist and verifone has cut deals with all of them. we're allowing them to get wide
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proliferation at millions of places to pay, and i think we're in a phenomenal place. >> so you believe that you can co-exist and not feel any impact? let me cite one ubs report that said new competitors will likely pose a legitimate threat to the status quo and payment, hardware and services over the next several years. there are many people who are of this camp, doug. you say that that's completely off base? >> what i'm saying is that verifone has been very innovative and has opened itself up like switzerland to all of these new payments modalities, but the existing infrastructure that retailers depend on needs to be secure and needs to exist as it is today as a way to both introduce all of these new payment methods and keep everything else going so i think we're in a great place. a lot of ways we have the beach front property for the mobile payments deployment. >> so in terms of the decline in the stock, doug, are you saying that wall street simply doesn't understand your story which is actually fundamentally intact
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and not impacted by the changes happening around you? >> the vast majority of wall street analysts have this as a strong buy or a buy. this last quarter we had 16% organic growth, 21% get on a cost-to-currency basis, all-time record revenues, all-time record earnings, all-time record gross margins, all-time reporting operating margins. i have nothing to apologize for. the company is doing fantastic. >> okay. walk me through then the hardware side of the business, doug. if everything can co-exist, can you tell me and tell investors out there that average selling prices will feel no impact from the fact that a lot of your competitors are offering things for free? >> we have one competitor. their name is ingenico and they are based in paris. our asps as we reflect in our growth margins have been going up, not down. by 2015 mastercard and visa have announced that the u.s. is going to chip and pin, emv.
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that adds more complexity to the point of sale. i'm very confident of our competitive position and our pricing power in the market. >> you have said in the past, doug, that you hope that the mix of hardware to software will reach 50/50 by 2015. how do you get there. do you need to do an acquisition to beef up the software side of the business? >> no. we stated that goal a few years ago when we were 10% services. now we're 30%, and we're right on the trajectory to get to 50% by the end of 2015. retailers no longer can just deal with a piece of hardware. they need a total solution, a payment as a service, and as emv comes into the u.s., you're going to see more and more adoption. we announced our first payment as a services deals last quarter, more this quarter, more in australia, more in northern you're. i'm very confident of the outlook. >> doug, you outlined a lot of metric surrounding your earnings in terms of it being record levels. the stock, again, hate to bring it up, but the stock is not reflecting that.
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what do you think is the disconnect here? >> you know, we're in a lot of ways we're a -- a discussion topic because there's so much happening in payment. i think the wise people will understand that the incumbent, as long as he's innovative, is going to do extremely well here. i'm in it for the long haul. just bought a bunch of shares a few months ago. i think this company is going to do fantastic in the new world of payments. >> again, i hate to beat this over the head, but this is one of the core reasons, doug, why this stock price is not reflecting the story you're telling to us today. is square a direct competitor with you? >> square is effectively an iso to chase payment tech. they are a distributor of payment processing services. we provide complex technology at the point of sale that allows everything to co-exist, visa, mastercard, american express, google, isis, paypal and even other wall that's the are out there. in discussions with retailers around the world, they are not
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willing to accept just one mobile wallet. they want something, some piece of technology that allows them to accept all of these mobile wallets and allow all that exists today to continue to exist in a secure way, so we're in a great -- we're in a great spot. >> all right. doug, we'll leave it there. appreciate your time. >> thank you, melissa. >> doug bergeron, the ceo of verifone. >> we've got a big market rally here, up 186 points on the dow. we'll talk to somebody next who believes in the wake of what draghi said today we could easily put another 50 points on the s&p. stay with us. my volt is the best vehicle i've ever driven. i bought the car because of its efficiency. i bought the car because i could eliminate gas from my budget. i don't spend money on gasoline. it's been 4,000 miles since my last trip to the gas station. it's pretty great. i get a bunch of kids waving at me...
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tell your doctor your medical history and find an arthritis treatment for you. visit and ask your doctor about celebrex. for a body in motion. to the to keep a close eye on financial, bake of america up 4%, jpmorgan almost the same amount and the s&p as well, 1422, guys. very close to levels that would put us at a four-year high going back to the highest level in 2008. >> breaking news on natural gas inventories, and former president bill clinton speaking to his party's faithful last night. find out what the governor of
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illinois pat quinn has to say about last night's dnc message and what he's looking to hear from the president tonight. oh, hey alex. just picking up some, brochures, posters copies of my acceptance speech. great! it's always good to have a backup plan, in case i get hit by a meteor. wow, your hair looks great. didn't realize they did photoshop here. hey, good call on those mugs. can't let 'em see what you're drinking. you know, i'm glad we're both running a nice, clean race. no need to get nasty. here's your "honk if you had an affair with taylor" yard sign. looks good. [ male announcer ] fedex office. now save 50% on banners.
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i'm sharon epperson at the nymex with breaking news from the energy department about natural gas inventories. natural gas supplies rose by 28 billion cubic feet in the past week, up by 28 billion cubic feet. some of the shut-ins due to hurricane isaac, a big reason
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why we're seeing a pretty small injection in natural gas supplies. the average is somewhere around 60 bcf for this time of year so very much below average. we are looking as though this being somewhat in line with some of the broader consensus estimates, but the range, the platt survey was an increase somewhere between 32 and 36 bcf. natural gas prices not really reacting much here. we are seeing natural gas technically in somewhat of a range between the 250 and the 290 level for natural gas prices, but the fact remains we still have about 26% of the natural gas storage, natural gas production, i should say, in the gulf of mexico that is still shut in after isaac so that will perhaps hamper some of the injections for the next couple of weeks. we're also looking at the surplus of natural gas that has been shrinking somewhat, but still plenty of natural gas out there, so we'll continue to watch how this affects natural gas storage levels going into the latter part of this month. back to you guys. >> thank you very much.
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the view of the new york merck here, summer tight trading ranges, up over 160 points on the dow. welcome to the program, j.j. >> hey, simon, good to see you. >> 1424 on the s&p. we're butching up against quite important resistance. do you think we've got the momentum to break higher? >> i think it's going to be a little bit difficult with the unemployment number coming out tomorrow. you know, it wouldn't surprise us to make one more or two more runs at it today, so to speak, but when have you a big number what, tends to happen on days like this so often, there's end-of-day selloffs as people take a little bit of profit. there is a lot of risk going into that number, and i just think that even though the adp report today was a very nice one, people may be a little bit nervous about doing so. >> this is not a turning point as far as you're concerned? >> no, it really isn't. hey, if we break through, great, but, again, i think that this is
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one of the fridays, as you said, we're out of the summer. this isn't a summer friday. this is a friday that matters as to what happens all day long, more so than we've seen in the past, so i think, again, all eyes are usually on this unemployment number. you know, we had the ecb number today. it's sort of come and gone, so to speak. everyone is looking past it as to what's next, looking for unemployment. people starting to set up. would not surprise me at all to see the vix pop up a little bit this afternoon as people start to take profits. >> 8:30 tomorrow, full coverage on cnbc. j.j., thanks very much. >> have a good day. >> and you, too. >> the fed releasing its financial disclosure report. steve liesman has got the latest. steve, we'll also get your thoughts on mario draghi. >> yeah. let me just tell you we've been able to go through the disclosure of fed chairman ben bernanke. his assets remain pretty much where they were in the prior year, in a broad range that we can cull from the documents
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between 1.1 million and 2.3 million. his biggest assets are two retirement accounts he has listed between 500,000 and 1 million. now, the interesting thing, he refinanced his mortgage last year at 4.25%. when was that, that was sort of in the middle of the year or towards about august before mortgage rates fell below 4% after the fed announced operation twist, so the fed chairman not doing a whole lot of market timing right there but didn't get his mortgage at the very best time. two biggest assets were retirement funds. continues to reap income between 100,000 and $1 million on textbookses that he has written when he was an academic back at princeton and before that. >> steve, i'm not sure -- given that he knows that they might extend the promise on low rates to 2015, i'm not sure he needs to remortgage now. he may feel to remortgage later
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down the road. >> already did refinance. >> can't get a better rate. >> i can't tell exactly from the documents when he refinanced, when it appears, when rates -- >> did he go the 30-year? >> yes, it's listed there. it's listed. >> that's very traditional. >> the fed chairman can decide when to refinance himself or does he need an adviser to do that? >> almost seems like inside trading. >> i mean, that's the problem, right, is the guy has a right to go out and get a mortgage. >> of course. >> when is it right? >> a little bit more prescient than some of us. >> i would hope he is. >> changed the rules. >> i would point out, i would pint out that i think twist was in the air before august. it was out there, but the market really moved after twist, and can you see it. if you look at that chart, it
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drops down below 4%. bernanke was unable or did not take advantage of those lower rates, so i wonder if he's thinking about that now. he used a company called george mason mortgage, which is like it's attached to cardinal bank which is in the northern virginia area. >> interesting. >> all right, steve. >> we'll be looking at some of the other documents as they come in. >> we look forward to it. >> steve liesman from headquarters. >> the markets are surging this morning. the dow up by just about 210 points right now. >> wow. >> for more on the big draghi rally let's bring in the chief u.s. equity strategist with jpmorgan. >> tom, good to see you. you see 1475, you see a market meltup continue through election day. what are the other cat lifts that you see lined up to get us to that 1475 level? >> well, you know, i think we just need more of what we've been seeing this week which is really from policy-makers, you know, talk that they are making moves in the right direction, right? i think there's a lot of comfort from what the ecb said, even if it's expected, and i think it's
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the economic data continuing to improve. i think there is a construction recovery in the u.s. led by housing and we could see jobs and it would tell investors, hey, look, i'm underinvested and been very bearish and thinking about cliff and all these other issues and now i've got to think about how cheap the stock market is. just as a piece of trivia though, you know, this year is turning out to be the second best year of the bull market. if we close just at this level, so, i mean, investors are really missing out if they are not long. >> tom, are you sure? i appreciate the situation in housing here is good. it's stable. it appears to be stable and retail sales recently have been very good. elsewhere europe is heading back into recession, huge concerns about what's happening with china and a lot of people would suggest it actually profits now are clearly peaking and will fall from here and therefore arguably the valuation on the stock market should also fall. how would you counter that? >> i would say that to the extent profits were dependant on
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a manufacturing boom, that's really what -- what's slowing. that's what the global pmis are telling you, but there's a huge profit story to come from construction in the umpts you have to remember, every time you build 250,000 homes in america, that's $4 of after-tax profits for the s&p 500 so we can get starts from 700,000 today to a million, million and a half, the s&p will get another leg of uplift in earnings growth from housing actually? >> hey, tom, you always do a lot of work for catchup for money managers lagging the index. what's your work showing you right now? how bad is it and what's it going to mean for the fall? >> the news is still devastating. end of july we were talking about how this is the worst year for active managers really in history. the number missing, you know, never seen numbers so large, and if you look at the monthly tracking -- sorry, the weekly tracking data and kenworthington, our brokers analyst does this, the area has grown as markets have moved up,
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seen active market management be about 70% of that meaning people are missing about a third of the upside in the markets >> you know, you talk about people missing out if they are not in the equity market. they have chosen to miss out, haven't they, tom? look back at the year. money has flowed back into fixed income. 30 billion alone into junk bond funds. >> that's right. >> when is that going to change? you can sit there all you want and say people are missing out. you may be right, may not be, but they don't seem to care. >> the rally in junk i think is very positive for stocks because, number one, there's a high correlation between the two markets. you have to remember when you take the yield of the high-yield market and invert it, that's basically the pe of the high-yield market. it's now at 14.5. the s&p, if it traded at the same ultimate which it should, should be close to 1600. look at 360 months of high-yield history, two months when the s&p had a lower pe yield than the market.
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we're looking at a situation where the high yield market says stocks need to move higher. >> a lot of managers have to play catchup and the housing market stagnant, still a few months left, and we're at 1427. walk us through. i mean, how likely are you to bring your target up? >> well, you know, we just put out a piece today sort of looking at how markets trade in close presidential elections into the election day itself. the average gain is about 3%. so it's telling us there's about 50 points from today, and what you really want to buy again is financials, energy, you know. you want to buy the basic materials, tech, consumer discretionary. our large-cap bank analysts actually upgraded some of the banks because the housing recovery is under way. i think there's broad-based support coming from our analysts that there's a play to be made in u.s. housing. >> but you're happy with 1475. you're not thinking 1500 or above? >> i think, you know, one, the
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sort of pulling into market and the melt-up dynamics could push up above 15 in election day, but i think further gains after election day are really dependant on a romney victory. again, you know, markets could be surprised. i think the market is baking in an obama victory, but if romney wins we could take out easily something north of 1500. >> tom lee, thanks for joining us. >> great. thanks for having me. >> one more market flash here from jackie d'angelis back at headquarters. >> hey, carl, keep an eye on delta airlines. their investor conference, deutsche bank conference making comments saying third-quarter profit should be solid, even as rising fuel costs are pressuring the margins. the operating margins, that is, expected to be 9% to 11%, a point below expectations, but, again, they are reiterating that profits should be solid. watch that stock of 3% in today's session. melissa? >> jackie, thank you. coming up next, heading back down south of charlotte where the governor of illinois pat quinn will join us with his thoughts on clinton, president obama and last week's rnc message.
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former president bill clinton nominating and endorsing president obama for a second term in the white house last night in charlotte. >> their number one priority was not to put america back to work. it was to put the president out of work! i hate to break it to you, but we're going to keep president obama on the job. >> and, of course, the president will accept his party's nomination tonight in primetime. for more on what to expect from mr. obama, the governor pat quinn of illinois joins us from the convention floor in charlotte. >> been a great convention, michelle obama the first night, president clinton last night and president obama tonight. i think we've got a trifecta.
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>> yeah. there's been some powerful speeches. it's been said that clinton in 20 seconds made the best sell for the president, better than the white house has been able to make in four years, what do you make of that? >> there's only one bill clinton. did a great job last night. i think he really summed it up is that under democrats america gets jobs. under the republicans we don't do so well, and i think our president tonight will continue the effort to make sure that americans know the facts, and heard a lot of fibs last week at the republican convention and it's time to straighten out the record. >> still though, some read it as bit of a liability, that the white house or the president himself can't make that case. in the end, politics are a singles game, not a doubles game. how much pressure son him to sell himself tonight? >> well, i'm a white sox fan, and so is president obama, and we're in first place. we're going to stay in first place, and i think president obama can more than adequately handle the description of what we've got to do to the economy
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and to the -- just to get our country back moving forward. he's done a great job in helping us recover from the worst recession we've had in our lifetime, and he'll lay out i think a plan for the next four years that will really keep the american economy going forward >> you know, a lot of discussion about those two gentlemen that we're watching right there. their friendship had been frayed. appears to be on the mend. president obama is in no way saying the era of big government is over. i don't think he'll say anything approaching that tonight. >> he'll lay out agenda for the next four years. better off than four years ago. out of iraq. somebody with a pre-existing condition can get health insurance and in our state of illinois our automotive industry is really going strong. you know, chrysler had 200 jobs in january of 2009 when i became governor and when the president became president. it has 4,500 jobs in belvidere,
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illinois today, so the president knows how to get the economy moving forward, and we'll hear a lot about that tonight. >> governor quinn, there's still a huge public deficit. obviously people are very worried about the death, the debt-to-gdp ratio, 7%, 8% is the largest of the major economies in the world at the moment. at some point presumably the president has to talk about pain, shared pain for everybody to reduce that deficit, because the figures can't simply be closed by saying, okay, we're in the going to extend the bush tax cuts for the rich. that isn't enough money anymore near, it is it? >> well, we need economic growth. i think the president's plan is the best plan. we want to rebuild our infrastructure, our highways, our roads, our broadband all across america. that's a good way to put people to work. >> i'm sorry, sir. >> and education. >> do we close the gap by cutting money? isn't that how you close the deficit, you deny people things that they have at the moment. isn't that the conversation that we all need to have with one another? >> well, i don't think we'll be
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hearing a lot about root canals tonight. i think you can squeeze nickels and loose half dollars. the most important thing we've heard in the first night, both from the first lady and last night from president clinton, and i know tonight from president obama, we've got to educated. if you want to be pro-business in america, you've got to be pro education. >> no convention can be without drama entirely and this mess regarding god in the platform, jerusalem in the platform, how damaging and are there voters saying in florida who might actually be turned off by that? >> well, would i say this. i believe in god we trust. that's our national motto. i think the democratic party and all people who understand the importance of faith know that that's important, and, you know, the president of our country, president obama, who i know, and i've known a long time, he's from our state, he's a god-fearing man, and he wants to make things better for everyday people. >> finally, we've got a rally here on the stock market, governor. dow is up a couple hundred
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points. >> i heard. >> it may close today at the highest level of the obama white house. would you mention -- would you mention that tonight in the speech if you were giving it? >> i would. i think the stock market has done very well this year. we're on the rebound. we're president clinton said from the very worst recession anyone could ever imagine. we didn't create the mess. we're the rescue team getting people out of the mess, and we're sure not going to put the same people who created the mess back in. i think president obama will layout in plain language what our country has to to to keep going forward. >> governor, appreciate your time. good to see you. >> thank you. >> a quick programming note, be sure to stay with cnbc for special coverage of the address at the dnc tonight. coverage begins at 8 p.m. eastern time. >> as we approach the moment of climax find out what the mayor as to say about playing host and what his take is and ahead time for rick santelli, the santelli
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exchange in the third hour of squawk on the street. good morning, rick. >> good morning, simon. i listen to president clinton's speech last night and it was rousing, for sure, but there is lies, darn lies and statistics and it is very hard to decide what is real and what is pie in the sky, but for the santelli exchange, we're going to talk about all of those issues. which pie would you rather take a bite of? i really like seeing our governor. we now know what to avoid on the national scene. see you at the top of the hour.
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welcome back to "squawk on the street." take a look at the s&p 500, a new four and a half year interday high poised to close at the highest lels since january 2008. being led by all the right sectors. take a look at the sectors here, energy stocks all leading the way right now. elsewhere, health care is the only major sector at an historic high. that happened in the last couple days. it is happening again today as hmos as well as drug stocks lead the way. also want to note the euro is sitting at a two-month high and
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obviously what's going on in europe impacting our markets. the big question here is, heck, a down beat assessment of the european economy, lower gdp estimates, earnings certainly are not going to be great in the u.s., in the fourth quarter, or in europe. why is the stock market going up and the bulls are argue field goal europe does calm down we can argue for a multiple expansion. instead of 13 or 14 times forward earnings maybe we can argue for 15 times even if earnings aren't going up. >> we'll see you soon, bob. tweet time, don't the president will make his case for re-election at the convention and the "wall street journal" raises the issue when he takes the stage he'll probably already know the details of tomorrow's jobs numbers, so just as former fed reserve chairman alan greenspan had the brief case indicator, what might the president's indicator be tonight? tweet us and your responses later on this morning. this country was built by working people.
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great! it's always good to have a backup plan, in case i get hit by a meteor. wow, your hair looks great. didn't realize they did photoshop here. hey, good call on those mugs. can't let 'em see what you're drinking. you know, i'm glad we're both running a nice, clean race. no need to get nasty. here's your "honk if you had an affair with taylor" yard sign. looks good. [ male announcer ] fedex office. now save 50% on banners. keeping a close eye on a broad rally being led by industrials and financials. the worst performing dow stock
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is proctor and gamble and it is up almost 1%. we're close to looking at levels talking about the best gain almost of the entire summer. >> in a very difficult training environment which is what it has been. people have to buy in. that's the issue here. >> you have to talk about this tonight, i am guessing. >> definitely, definitely that, and also will bernanke deliver on qe3 now that we know what draghi has done? one of our traders has been short ver cone for much of the decline and we'll get an update. >> we'll talk draghi in a little bit as well. >> big news in europe. >> the market continues to divest, two-month high for the year. >> tell me the story. >> meanwhile, if you're just joining us this morning here is what you missed earlier on. >> welcome to hour three of "squawk on the street." here is what's happening so far. >> the benchmark unchanged at
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0.075%. the facility also unchanged. >> job growth from august was 201,000, reasonably above expectations of around 140,000. >> did they cut rates from three quarters to .5? showing darrell and the team and bernanke and bernanke's plan is working. >> with the hopes sprint will become robust enough and the hopes nokia and motorola or rim once again be a real competitor? >> i think you have to sum this up by saying nokia, what is it good for? absolutely nothing. >> i think there is a great will to keep the union in tact as it is but everybody somewhere has a plan and saying if we can't, then maybe we have to let that one go. it is not what they want, but it is a possibility. >> this last quarter we had had 16% organic growth, 21% growth
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on a constant currency basis. all time record revenues, all time record earnings, all time record gross margins, all time record operating margins. i have nothing to apologize for. the company is doing fantastic. >> welcome back to squawk on the street. breaking news on crude oil inventory. sharon is at the nymex. >> the latest report from the energy department shows crude supplies were down by more than 7 million barrels in the past week, down 7.4 million barrels in the past week. you have to keep in mind about 1.3 million barrels of crude production was shut in in the gulf of mexico at the end of last week when the statistics were given because of hurricane isaac. gasoline inventories down by 2.3 million barrels, also keep in mind that venezuela's apple wmw refinery only 40% capacity after the fire in august and
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distillate fuel supplies rose by 1 million barrels. >> sharon, thanks so much. let's get a check on the markets. we're in the middle of a big rally after an upbeat adp number, remark from mario draghi, dow up 240 points, s&p up 25 to 1429 and the nasdaq up almost 55 to 31.23. chip makers leading the way. take a look at sandisk, micron and inindividual aand sea gate taking a big dip today. the firm citing weakness across the sector saying the release of microsoft windows 8 unlikely to stimulate demand for pcs. amazon set to make a big announcement in california a couple hours away. is it a kindle? is it a phone? no matter what jeff says we'll tell you how to play the stock.
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day three of the dnc in charlotte and the president taking the stage tonight will formally accept the nomination. larry kudlow joins us with his take on everything going on in the political world and reacting to the ecb and how it is playing out during the european close in less than half an hour and talking to the mayor of charlotte about his city's continued success and how it stands to benefit from the convention. all of that and more is coming up in the next hour. have to start with the rally. joined by steve grasso, normally coming on as i am walking off. >> on at the same time today. >> how real is this and why is it happening? >> you know, the head lines you just read were basically 50% of what the market has been waiting for so now we still have the big jobs number tomorrow and still have ben bernanke and he will talk as well in a couple of days and we'll hear from him and the truth is the market has been waiting for this, the shorts have been run over so many times
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and there has been underlying bid, 1426 in the s&p, the recent high and just traded through that and now when you start to watch those buy programs p elected because everyone sets their systems with those same levels right now because there is just so much lack of clarity, the only sthing you do know are the levels. above here to stay consistent with the levels you can go up another 1 or 2%, and i think that's the line in the sand that we crossover that and then you look at 1500. i have been a bear. i have been a ber. you have to say i am beating my head up against the wall if we go over 1442. >> that's not to say what draghi said is anything more than pal la active care, doesn't solve the growth and you look at ism and knowing what we know about our economy, we are about services. we're not about manufacturing. >> our main issue is depends on what ism you're going to look
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at. you look at the first one and say, wow, new waters are terrible and inventories are basically too high and you have the reverse. once you get a couple of days in you have the reverse of it. when you talk about draghi's comments, it was an unlimited bond purchase and you hear merkel talk about the conditionof everything they need it. the more you look under the hood, maybe the more disappointing it will be a couple days out. >> is volume backing this up? >> i have also been concerned with volume. if you look on an historic basis, obviously volume has been increasing and during the financial crisis you saw volume explode, so if we're comparing it to that, then volume is terrible. credit suisse put out a piece that maybe it is not so bad. i think what's happened is you're seeing a lot of these cell side firms internalizing their volume so the public doesn't see that volume and that actually disadvantages the
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retail investor because he doesn't get a chance to participate. >> right. going to be interesting to watch. as we continue to build here through the course of the day and i know you will have more later on, steve. >> thanks. >> let's get to our capital markets. gary kaminski at hq, i know are you watching everything that's happening >> good morning. let me frame this a little bit and point to understand, conference week here in new york. portfolio managers running around the city, and as you know, a lot of times what we do here today we started planning last night and last night i asked our produce to her run numbers. i didn't think it made a difference what the ecb said today. i will get to that and explain that in a minute. take a look at the s&p 500 last year january 1st to september 4th. year-to-date it was down 7%. let's take a look where we are. going into today year-to-date s&p up 13%. it felt much worse. in fact, for most people that
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manage money it sdelt like a disaster going into today and a lot has to do with the relative under performance. i know tom lee and j.p. morgan talked about and kelly is doing great reporting as she does in terms of hedge funds and let me tell you the reason i thought last night this in fact was the case. take a look at the data. this is tracking the s&p percent changes over the same period days where the stock market was up half a percent or down half a percent. i didn't know what these numbers we were going to look at. we ran the numbers. last year 112 days we had to move up or down more than 50 basis points on the s&p. this year 76. why does this matter? what does it mean? it means that you can no longer crouch behind relative under performance based on volatility. you heard what steve was saying. you heard about the issues about volume. this is what it comes down to. you have a couple of months left to make up the relative performance to save your
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business if you manage money for individuals, institutions, pensions, whoever it is. as one person who is very bullish said to me i have to read this e-mail to you, those who have not eaten the bait will have to figure out what happens if a pull back does not come and the rally started to broaden out and i wish it would back off and i am getting the feeling it may not. that's why i didn't think it mattered what the ecb said today and i think that this number is right here to tell you what is facing those and professionals the rest of the year and that's what you have to focus on. >> you believe, you buy the argument those active manager who is are behind will be a marginal buyer in the last few months of the year? >> it has been the case every year since 2008. the reason i buy it, carl, i have sat in that seat. i know exactly what it feels like. fortunately many years we were not in that case. we had the out performance. i know what those that sit in the seat feel like and this is a basic attempt to save your business between now and december 31.
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you cannot tell your clients based on this data, again, i didn't know where this was going to come out when sally asked to run these numbers. i had a feeling. i didn't know. that tells you that you can no longer tell your clients we have stayed cautious because of volatility. >> correct. gary, see you in a few moments. good stuff. thank you very much. get to chicago and check in with rick santelli and the santelli exchange talking about growth and i am told the power of persuasion, rick. >> you know, it is a powerful scenario. i thought president clinton was very powerful last night. once again, there is lies, darn lies and statistics. let's look at a few issues here. if you consider we constantly hear scott scone's fact check. we'll make it simple. if the president got in and jobs were going down and jobs your honor itted up and if you count it here this much and here 4.5 million and you get what i am saying. another thing i find fascinating, when you consider
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spending levels, which is huge, i am all about spending and stop spending, if we have crisis levels up to this level and moderate rates and does this and if you count from here to here, spending went down. really you have to count all the way back. you get what i am saying. when it comes to entitlement programs, i thought the president last night was so powerful but yet let's really be honest here. stls a ponzi notion. they can't continue the way they r you can slice and dice it any way you want. it is about one thing, growth. this is the honest answer about everything. i will tell you why i know that. if you consider the economy, it is like these pies, and the problem we have right now is if you slice this little pie into four pieces, here is what you get. if you slice this guy into four pieces, wow, there is a completely different scenario. i ask you, would you rather have this slice or this slice? the problem we have now is we're not growing the pie.
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the ex president can spin it any way he wants. if the pie is getting smaller and entitlements are getting bigger, we're all going to be fighting over less and less pie. the answer is not whether you're better this year, last year or whatever, it doesn't matter what president started the problem, what president started the spending, the real issue in this country and europe who stabilized short rates but they're not talking about growing the economy is that the world cannot subside in the developed countries with smaller pieces. if you don't grow the pie, we will all end up going opa and acting like greece. back to you. >> thanks so much. getting hungry already. our control room is salivating. thanks a lot. rick santelli in chicago. hours away from amazon's big event in los angeles. will the giant introduce the latest weapon in the tablet wars, a new kindle fire, a new phone? what's likely and what is fantasy? aaron kessler, a senior analyst at raymond james joining us here and victor anthony of tow peek owe capital markets.
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good morning to both of you. interesting morning. we were chatting offset about what you think this is going to be. >> right. i think they will come out with an updated kindle fire and also talk about amazon adding a cheaper device that is ad support so that's two and also a possibility i think they will announce a larger tablet device as well as a smartphone and that's speculative. >> are the rumor, all the tech blogs want to go with things like a smartphone, a docking device that would translate video to your television, a video box of some kind. are those too out of the box, do you think it is kindle and more hardware. >> i think it is more kindle devices and largely to focus on the event today. you may get a smartphone and you may get an announcement about selling the devices internationally more like in europe and so that's what i expect out of this. >> aaron, how about you? what's your guess? >> i would agree with victor. i think at least an updated
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kindle tab let e-reader and smartphones a possibility and doesn't sound like it is ready yet if they were to announce that. we would have to wait and obviously speculation about a set-top box and they're about the razor blade model so selling more items is a cost for them and trying to get more money from selling books and video content and music as well. that's where the amazon model and the razor blade model and continue to have an attractive offering price. >> victor, i want to talk about what inning they're in and what chapter they're in. it is frustrating for some who felt cheated by a lack of metrics, lack of transparency, lack of margin. is this payback for the company? is this the reaping for all of the things they have sown over the past few years? >> e-commerce is only 20% and amazon is forward position for that. i think it is early as far as retailers are concerned and i
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think the heavy investments over the past two, three years, you're starting to reap the benefits of that. you're seeing that in the financial results more so in the top line but i think you will see that in the back half of 2013 when you start to see margin expansion. >> are your target is 400. >> it is 400. >> and, aaron, do you feel the same way? >> we have a market perform right now. we do like the fundamental outlook for amazon although it is currently 70 times or 2013 earnings and we think it is pricey a lot of the positives at these levels so we would wait for a lower entry point. >> valuation a concern at all. >> right now the stock is trading 26 times cash multiple and grows loes to 40% so trading at diskupter free cash flow growth so not a concern for me. i think amazon is in the position as i said in terms of e-commerce. you have seen it being transformational and in the back half of next year you will see margin expansion in a big way in the model. i like this level and i will
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continue to buy. >> i understand your point about 7 times. seems like every time we talk about a retailer, there is some exposure to amazon that's impacting them in a negative way. how is that, why does that limit your thumpl relative to victor's call? >> we do like amazon fundamentals. we think the key thing is it is a long-term growth story. they're managing business the next ten years and doesn't mean it will be a positive the next couple of years for the margin so we want to wait a little longer until the margins start it have an inflection point and we don't think that's it in terms of the outlook. >> all right. we'll see you. sounds like are you saying roughly the same thing with different timelines. appreciate your guidance, victor, aaron and we'll see what happens in california in a few hours. a market flash from jackie deangeles. >> a strong day for the s&p 500, the materials the best performing sector, up more than 2% and the best performing stock is owens, illinois, speaking at
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the bank of america merrill lynch conference and the thrust of it basically the stock they're focusing on the right things, the company that is. europe of course is sluggish and that's offset by latin america and also productivity for the company is up. bank of america/merrill lynch as their price target at $22. the stock now trading at 18.67. >> when we come back reaction to bill clinton's speech at the democratic connevention and larry's take on the dnc and all things politics. dow is up 226. back after a short break.
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welcome back.
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we have comments from the bundes bank. he says he sees the bond purchase as too close to monetary financing and i got a statement, slightly different, tantamount to fiscal policy. they must not be permitted to jeopardize the capability of monetary policy to safe guard stability and saying it will under mine ecb credibility if the reform slows and one other headline, it is central, the bundes bank says to stop purchases if condition although is violated. i think it is interesting. they're saying, all right, we lost this and now we're saying going down the road here if you're going to do this, make sure you stop these purchases if that ends and i will point out that mario draghi did say they would be terminated and he emphasized that word if the
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conditionality were to go astray. >> turning out to be one of the great rivalries, the relationship between these two men. >> i think that's right but sounds like he put his opposition out there and very much the way a fed president would dissent in a vote and then not continue his dissent out in the public quite so very sifr usually. i think he is saying this has happened, we dissents, we moved and if you are going to do this, keep the clauses here. >> thank you very much, steve least man. former president bill clinton firing up the crowd at the dnc and tonight it is the president's turn and we turn to larry kudlow joining here here this morning. what did you make of it. >> i thought clinton gave a hell of a good speech sbl as simple as that? >> it was 20 minutes too long
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but it always was. i think he made obama's case better than obama made his case. i disagree with about half of what egtsd, but i always did. i always regarded clinton -- let's hear this. >> i don't know if it is sound full. >> it may be good. what is good politics does not -- >> see, here is the only place i really disagree with clinton. clinton talked about working together, about i forget, not as much partisanship, and he said let's work together. that is the one thing that bill clinton did with republicans and accomplished a lot, and we had excellent growth during the clinton years. okay? it is in my opinion the one thing he has not done. he doesn't get along with congressional leaders. he doesn't get along with his own party much less republicans and i thought that was the key difference and a very weak spot. maybe clinton is saying to obama you ought to take my cue and
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work with these guys because we have big problems. that surely, mr. obama has not demonstrated any cooperation in this game. >> that is raising a lot of eyebrows. if clinton is your alpha surrogate, why the bridge, the gap between his policy, his world view and what he expect obama's world view? >> there are two different world views. i always believe that bill clinton was ronald reagan's third team, particularly when the congress turned republican and incidentally i often praised clinton during those years that he did a great job. mr. obama is not cut from the same cloth. clinton cut spending substantially. clinton raised taxes and then he lowered the capital gains tax and clinton had welfare reform and obama seems to be cutting welfare reform. they are cut from totally different cloths and i think he was a good trooper and i mostly think bill clinton had a great time, delivered a wonderful speech. i watched it. it was nostalgic.
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maybe the stock market rally is nostalgic for clinton. who knows? i know there are other good data points but basically i enjoyed watching bill clinton last night. i really did. >> we look forward to seeing you tonight. >> a long night covering the obama speech tonight and i look forward to it and i may not be so sympathetic to this one. >> coverage begins at 8 p.m. eastern here on cnbc. get the european close in a few moments. don't go away. at optionsxpress we're all about options trading.
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the dow lost steam and the s&p close to an interday high, the highest since may of '08. will this fade when europe closes? we'll find out in two and a half minutes. bob...
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simon hobbs said it will be a big day and it has turned out to be that way maybe for reasons we didn't expect. >> phenomenal price action across western europe you can see as we close down and for many people what will be regarded as an historic day. draghi certainly verbally delivered today a much trailed speech and much leaked and much discussed and walked in front of the crowd and said, yes, there will be unlimited bond buying in europe in the secondary markets
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and provided countries came through and accepted the discipline of an imf style program and it will be a transparent process in his view and not require the sub board nation of the private sector when they bought those bonds and the reaction, it is just phenomenal reaction. you might say we have been here so many, so many, so many times before and we have rallied on the announcement and usually a summit and after that we have fallen back as the disappointment begins and look at the price action so far today and the way in which because so many people are under performing the market, as the market rises presumably, they have to buy in, so you get this accelerated move higher. on the three major markets germany and france up almost 3% and even more astound field goal you look at the peripheral markets, spain and italy who are most likely to benefit, of course, from what is going on. you have a gain there of almost 5%, the prospect of stability, arguably, if draghi's plan works and he says it will remove the
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tail risk. he says it is the politicians now but i am removing the tail risk in europe. that's what the man is saying. look how it has risen. the italian banks rocketing higher and some weaker and a lot of italian debt, sovereign debt as the bond markets rally and the major banks around europe, the french banks, the exposure there and deutsche bank, over 6.5%, so that will go down well in new york for those that were worried the compensation was badly hit by the libor scandal. let's have a look. this is the power of intervention. it is five weeks today just before the picks when draghi said in london he would do all that was necessary to save the eurozone. look at this gain on the top 50 blue chips around europe, a gain of 17% in those five weeks. that is the power of verbal intervention. on the bond markets, of course, conversing as the bull markets have rallied particularly at the shortened because he made it
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clear that's what he would target and you have seen the yields come down. on spain we're down now from 7% at the shortened. we have come down to three. have a look at the italian market. the big question is can you finance spain moving forward? let's have a look at the ten year. the ten year is down. it is still 6%. spain has in october maturities of 27 billion euros that are due. it needs to raise that money and it needs to raise whatever the total is by then for the autonomous regions asking for support from madrid. therefore, does it have to ask for a bailout? can it finance itself at 6% even with what draghi has done? today importantly in madrid we have another meeting between the spanish prime minister and merkel. no sign there that he is about to ask for a bailout. he is under huge pressure at
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home. he says he didn't need a bailout, certainly not a bailout with conditions and he is not sure that merkel would say yes. draghi says it is up to the politicians. merkel may say i don't know how big the holes are in your banking system or the autonomous region and i am certainly not going to say yes to a bailout before i know the constitutional court next thursday in germany says we can set up the esn because of course the esn and the bond buy from that safety net has to go alongside the ecb. that's part of the conditionality and at least that got us this far. it was the shopping list he had to attach to bond buying to get everybody on board apart from one man. >> brick by brick as we're building this thing. thank you very much. let's get to rick in chicago and get his take on everything happening today in europe. good morning, rick. >> good morning, carl. i want to welcome my european sage mark rand from southwest securities and cover three
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topics, mark, conditionality and sterilization and growth. start with the first one. the conditionality takes away the notion everything is unlimit. it is all about the conditionality to traders on the floor. >> i agree. i think the big surprise is probably going to be the ecb will never be allowed to do anything, and i want to walk you down that path for a minute and give you the evidence. first place, the conditionality issue is centered to the ecb being able to do anything. that's that they agreed to. what do we find? we find in the last few days which none of your analysts have mentioned this morning, we find that the netherlands has just said the prime minister, there is not going to be any more money from the netherlands for grease and two days before that we have the finance minister of austria saying the austrians are done, they have had it, they're not going to any more austrian
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money to any other countries which means when you go to the ecb, to get money, and they have to go back to the eu and the stabilization funds, there is not going to be any permission for anyone to do anything so i think that the whole ecb move here is a false once and will never take place. >> the second one, and these are questions traders are asking me today. on sterilization, of course they'll buy let's say in the secondary market spanish three year. they can sell bills to sterilize but they don't have to be spanish bills. probably an ecb euro denominated bill. is that not the way you see it? that would not most bang in the secondary market for spain. >> let's look at the two i had so of sterilization, what itten moos, they're not doing a fed-type quantitative easing and the secondhand, though, it means they're not expanding money supply so that the same amount of money that you start with is all the money that it is available for these programs.
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even if you got to these programs and all of the funding is done in the ecb window of one to three years, it just means that you have a continuous amount of debt that is rolling and less money or the same money to fund a greater expanse as these countries, especially spain and italy, demand more and more money because they will be forced to line up and ask for it. >> thanks, mark. we're catch growth the next time we have you on. back to you. >> rick, thank you very much. rick santelli and mark grant, let's get to bob here at post nine. i will let you take it away, bob. >> the most hated stock market rally, now i will say in history, continues. it continues to get new highs and people continue to get more and more angry because a lot of people are directionally wrong. quick review, the s&p 500 hitting a four and a half year high. as of now it is very close. should close also at a new high. we're getting historic highs,
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historic highs in the big sectors, so health care, for example, hitting historic highs as drug stocks and hmo stocks put up health care and you can see historic high, looking at a ten-year chart here. consumer discretionary hitting an historic high. consumer discretionary mostly consists of retail stocks as well as homebuilding stocks and today we're seeing a lot of home builders hit new highs and we had a good earnings report this morning and put up the home builders and you will see new highs and some not necessarily historic highs. let me just talk about what the trading community is saying. how can this be? how can we hit new highs on these facts? we have lackluster growth in the united states. we have draghi coming out and downgrading the gdp outlook and out right recession as europe will likely be in 2013. how can this be? the answer from the bulls is
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where earnings may be lackluster but they'll still be positive. here is the estimates right now for earning. question down, q4 a big bump up. this isn't going to happen. this is 14 thst. the numbers will come down but still positive. overall for 2012, 4%, maybe 3%. not as much as in the past year. it is still growth, 2013, you know the numbers are the how. you know they will come down. it is 11%. that will probably end up at 5% next year. 5% growth, carl, is still 5%. it is not negative earnings growth. to argue for negative earnings growth, let me tell you what people are telling me. they keep saying you can't do this way. revenue growth is petering out, the margin expansions are tougher, china will have a hard landing, a soft patch in the u.s. economy, we'll hit the fiscal cliff. this is what people yell at me every day. here is the problem. this argument has convinced people to stay out of stocks but hasn't convinced the stock market to stay down. why?
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look. likely earnings growth is not going to be negative and there is a real logical argument for market and multiple expansion. instead of 13 times, if europe calms down, you might be able to get 14 or 15 times earnings. there is a risk premium in the market because of what's going on in europe and say it, draghi, bernanke put is very much in there. >> as some have pointed out, if draghi and the ecb have come out and said we're done and will do no mass, there woulding risk off today. >> if he did not use the word unlimited or whatever term that he wanted to imply that they would keep buying, that's the word the market is waiting to hear right now. >> fascinating to watch. market flash, jackie back at hq. >> watching shares of amazon, the stock hit as high at 251.99, expected to release a new version of the kindle fire today at that product and content meeting in california, 1:30 p.m.
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eastern time. the new fire is expected to be thinner, lighter, with a camera and cheaper so all eyes will be on that and all eyes are on this stock, carl. >> thanks so much. financials getting a nice boost this morning as bob alluded to, time for another op-ed. >> also check the relative performance stuff we gave earlier in the show today. financials take a look. financials having relative out performance today. i want to focus on one company there, morgan stanley. i think few would argue it is a difficult year in terms of some of the news that's been associated with morgan stanley, obviously suffering like the other investment banks and low m&a volumes and just general trading market conditions and obviously the facebook we'll say politely disaster and then also obviously recently you have seen a lot of press in terms of some of the problems in terms of technology with the morgan stanley venture and i will get to that in a minute. i think this will all change come monday. i will be out tomorrow and i wanted to make this point now.
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on monday as many of you know we talked about it before, you will get the valuation in terms of what is morgan stanley smith barney worth? citigroup says the joint venture is worth $22.5 billion. morgan stanley says 9.5 billion. will you get the numbers and the results on monday. i think this is a case as i have said before, i will reiterate is now, where you will get the low number, the value that this joint venture is worth being low, will be very good long-term and in terms of what morgan stanley will be able to pay for the remaining 17% and the subsequent followeding and the rest of it an why is it important? it is important because of the sheep mentality of the sell side of wall street. don't be surprised next week after the data am kos out, you will see a number of upgrades and positive comments out on morgan stanley as a result of this being put out of the way. in fact, for those that follow tactically they just crossed the 200 moving day average for the first time in quite some time. look for a better turn for morgan stanley starting next
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week. i am sure a lot of people will say it is about time. take a look at this one point. reuters put out a story last week about the brokers complaining about technology and leaving and let me tell you something. i know what happens with these things. these guys always complain. they're not going to he have loo. you will get a handful of people that leave and i inertia is a powerful force and brokers constantly complain and always threaten to leave and they're not going to leave. this is a big nothing. many complaining they will stay right there and don't let that be an effect of what you think the business is worth. >> it does raise a question where would they go? i mean, where are they going. >> i was involved in 1998 mov$1 moving a multi billion business from one firm to another. it is extremely la bother us and very tedious to do and it sounds good on paper but it is difficult to do. they're not leaving. reuters reporters 411, you were taken in my opinion.
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>> you have taken the only good tv job so there is that. >> exactly. i get to be with you every day. maybe times change next week for morgan stanley. >> the markets in rally mode across the board. a lot more on the big moves and what's driving it. gomery and abigail higgins had...
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welcome back. at the top of the hour a special addition on halftime when the markets are closing in on four year highs who better to talk to than lee cooperman of omega advisers. he will reveal what stocks he likes and how he is protecting his massive portfolio from year end uncertainty. it all stops at the top of the hour. >> that's a great get in television, scott. we'll see you in a few moments. another great get, art cashen, good morning to you. >> good morning. >> reading your note, you said the markets yesterday if was a marx brother it is more like harp owe. if that is har poe, this is chico. >> the piano was playing rather loudly. >> what accounts for it, is it deserved given the headlines we got? >> i think it is probably 80 to 90% europe and draghi and you can see it in the financials in a variety of other things and
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you also had a market set up for it. i said we had the tightest range in decades and that bodied for a big breakout, and that history favored the bulls in that case. i was not looking for this to be honesty thought 100 points or some such thing. that having been said and draghi being open ended, that has them moving. i think there are details missing likes our friend rick santelli. i am looking to find out about sterilization and those in the trading communities say if it is going to work, if the germans are going to go along with it, it has to be partially sterilized, otherwise the fear of inflation will come up and we need more details. >> your broader point is how do you sterilize something that is open ended. >> right. >> very difficult to do. >> yes. there are great mysteries and i hope it is not the case of in this bottle with elixer there is something that will cure almost anything. >> talk about levels. shades away here from 1430. we have had others suggest at
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some point you began to -- the shorts will have -- are done beating their head against the wall and you start talking about margin ex tangs toward year end. true or not? >> well, i do think the shorts have gone into a complete panic. they have one r run through several levels already. you're up at the 1433 level. that's an important level. it is a reach beyond the former highs and i think if you get through that, we'll find out how many shorts are left. if you punch through 1433, you look to see if there is another rocket shot, is there a capitulation move, no capitulation move may tell you the money is all spent. >> sort of waiting for that moment that doesn't come is what you're suggesting? >> that would be it. >> interesting. you can't ignore this is happening in the context of a big political week. this could be the highest close for the president during his tenure. how much is weighing on and pivoting around the election outcome? >> i think so far the market is
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kind of satisfied it is believe it or not a tight race and that for all the odd homonym attacks we're not seeing surprise changes in policy. you will either get a continuation of what you got or you might get something better. i think that has the market nullified for now and as tempting as it is for the president i don't think he will talk about the stock market tonight. as we all know in this business it can surprise you the next day handily. >> you sound like you speak from experience. >> 50 years of doing this. >> art, thanks. up next a lot more on the big rally and tell you how to play it after a quick break. at e-tre easy-to-use online tools and experienced retirement specialists can help you build a personalized plan. and with our no annual fee iras and a wide range of low cost investments, you can execute the plan you want at a low cost.
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dow up 230 and the market surge continues this morning. for more bringing in scott wren senior equity strategist with wells fargo advisers. good morning to you. >> interesting levels here. market appears afraid to take this just past 1430 which is seen as a huge level and the smart place, scott, for months has been to sell around this area and then buy maybe 30
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points lower. is that what are you doing today? >> they do. well, i tell you, art cashen, your last guest, mention this had level and certainly in my mind 1420, 1430 is a good technical level. i am sure there are buy stops triggered here. there is probably some more just above this. i am not a contempora trar an. i think it is the upside had in almost a straight line. i am kind of with the herd. i am looking for a pullback. i am a little bearish from this level, and so really i tell you, i thought and i still think we get a couple of details on this ecb bond buying program. we have a few things that might not go right on september 12th or maybe september 13th. you could be right back down at 1330 pretty quick. i am not a bear. i would love to see a pullback. we want our client's long
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stocks. we want them long cyclical stocks sensitive to the economy. it is hard for me to tell our clients jump in now. >> yeah. i don't blame you at all. that said, tomorrow morning we're going to get a number that is notoriously fickle, right, notoriously revised, and i am sure you will agree if it is good you will see incremental buyer say, okay, i am in. is that deserved or not? >> well, i tell you, i think people expect the employment situation here in the states to maybe even deteriorate a little bit but only at best get better slowly, so if we saw a good number, say an 8.2 print on the unemployment rate or more importantly we see a 150, 160, 170 number on non-foreign pay rolls, the market will have a bid to it at least early in the day. there is no doubt that this ecb action which i have fully expected the ecb to be in here
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aggressively buying spanish and italian debt at some point. i don't know if it is going to be real soon, but i think they're certainly going to do it, combined with an improving labor market or one that's going to improve faster than what the market thinks, that's good. i think the market would like it. we're at 1400, 1450. that's been our year end target. we feel pretty good about that, and i mean, right now given this news, we're not thinking of changing that, so i think we're pretty enclose he is to where we're going to be at the end of the year, but i certainly expect lots of volatility the rest of this month and then after that people start thinking about the election and the fiscal cliff and we have got a volatile few months here no doubt. >> i just love the hesitation in your voice which i think speaks volumes and is definitely shared among investors trying to figure this whole thing out, scott. thanks very much. >> thanks. >> scott wren at wells. keep the tweets coming.
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